In the CDP model of liquidity staking and lending protocols, the collateralization ratio (LTV) is the lifeline of your account. Many newcomers rush to chase yields, pushing the collateralization ratio to the limit, only to be liquidated after a wave of market volatility. This happens far too often.

Based on practical experience, the key is to leave enough buffer space. Although the protocol itself supports higher leverage multiples, the volatility of the crypto market is inherently astonishing. In such an environment, never go all-in. Reserve a 30%-40% safety margin — this is not conservatism, but the basic skill to survive long-term. The difference is: one person sees annualized returns and rushes in, while another first calculates the maximum drawdown they can withstand.

Another often overlooked point is to regularly monitor the exchange rate changes of staked tokens. Over time, the power of compound interest will steadily increase the value of these tokens. Understanding this mechanism can help you plan hedging strategies more accurately. A prudent approach should be: participate in yield opportunities while also protecting your principal from issues. Only then can you truly live steadily in this market.